Warren Buffett versus Sam Walton

We have all heard a lot lately about Warren Buffett and how he plans to leave a massive fortune, accumulated over many years of hard work, to charity. He, like Bill Gates, feels that they owe something to the country and communities which helped them prosper. It is a wonderfully good thing they are doing and I applaud them for it.

Gates and Buffett did prosper, and greatly! Each man has a net worth somewhere in the tens of billions of dollars. Sums of money that I can not even fathom, or imagine what to do with. But, they have a plan, and it is a good one. They intend to leave it to causes they deem worthy and I am sure the causes include better medical help for people, better education systems and many other notable worthy causes.

They are doing what good and wealthy people do – they help others.

But let us not think that there is only one option for what wealthy people ‘ought’ to do with their money. Helping others comes in many different forms based on what the people offering the help thinks best. I imagine that given Bill Gates background with computers that he thinks getting computers into the hands of young people is a great way to ‘help’ them, and he is right. I can also imagine that Warren Buffett might think helping people learn about the investment world is a great way to ‘help’ others, and he is right. But those aren’t the only things people can do! There are many things people can do, and having earned the money the person themself should decide how it gets used. Not government! Yet of late we hear about Warren Buffett and his determined efforts to make others pay more in taxes – to the government. Gates and Buffett have their fortunes tied up in trusts far away from the outstretched hand of the taxman and the federal government. Their money is safe and sound, directed by a handful of appointed trustees. I do not agree with paying more in taxes – simply because we somehow feel guilty from our success. Sam Walton would agree with me.

Let’s take Sam Walton for instance. We all know Sam Walton for his extraordinary success at running America’s greatest all-time retail organization – Walton Enterprises. He started a little retail store in his garage in Arkansas and built it one step at a time into the biggest and most powerful retail giant we may ever know. All along the way he was ‘helping’ people. He gave jobs to people he knew and trusted. He offered stock options to workers, many of whom retired on the dividends from those stocks. He brought massive wealth and success to hundreds of thousands of people across this country through his efforts. Not only did the people working for him succeed, but many of the people that sell him their products made fortunes as well, as did the builders that erected his stores and the companies that paved his parking lots, insured his employees, managed his portfolios, produced his paper bags, manufactured his shelves, guarded his property and the list goes on and on and on infinitum.

When Sam Walton died, in 1992, Helen Walton immediately had his will sealed in state chancery court. But, from comments he made earlier, he seems to have arranged to have his interest in the partnership pass to a marital trust for Helen. That way, he deferred any estate tax. On her death, it apparently was to pass to various family charities, resulting in no estate tax for either the Walton children or the family businesses. The charities would get a minority interest in the family partnership, so that the vote of the bloc of stock would stay under the control of the family.

By turning over ownership of 80 percent of his holdings to his children so early on, Walton avoided any substantial gift or inheritance taxes. He put it the way his father-in-law probably had put it to him: “The best way to reduce paying estate taxes is to give your assets away before they appreciate.”

Sam Walton had a decidedly different idea of how to treat the net result of his life’s work – keep it away from the government.

But lest you think Sam Walton did everything for money, note this comment during his final days before he died of cancer:

By “simplifying,” Walton evidently meant focusing even more than before on his one overriding ambition–the one that had led him to head to his office so many mornings at 4 A.M.; to spend so many Saturdays in meetings; to visit more stores across the country and around the world than, he was sure, any other person ever had: to leave his wife and children at camp-grounds or resorts while he checked out competitors’ businesses; and to keep at his grinding schedule for years beyond the age at which anyone else might have retired. It was to create the biggest and most successful company he could–to be, as one of his early managers, Charlie Baum, had put it, the top of the heap.

Walton had long said that the money, beyond a certain point, was incidental. Certainly, his personal habits–bragging about the cheap shoes he bought at Wal-Mart, borrowing change from other executives–sustained an image of sometimes comical frugality.

His public image of nonchalance toward his wealth had been cemented for good by his widely reported response to the great stock market crash of October 19, 1987, when the Dow Jones Industrial Average plummeted 508 points in a day and Wal-Mart shares fell 23 percent from their price of a week earlier, wiping out $1.7 billion of Walton’s net worth. Walton had gone to Little Rock to join other Arkansas corporate leaders for a press conference on higher education. As he arrived at Governor Bill Clinton’s office, reporters asked for his reaction to the crash.

“It’s paper anyway,” he had said, seemingly untroubled. “It was paper when we started and it’s paper afterward.”

I am more of a Sam Walton kind of guy. I take pride in my work, and the effort I put in is for the long term benefit of my family and my sense of worth. It isn’t so much about the money as it is in having pride of a day’s effort toward something you are proud of. I can’t help but think that Gates and Buffett somehow are ashamed of their wealth, perhaps as if they don’t feel as though they earned it.

Gates and Buffett are free to do with their money as they wish. But so should all people, and if they deem it wise to leave it to family and friends instead of the bloated, bleeding federal government rife with abuse, excess and waste then so be it. They should be allowed to stuff it in pillows and hide it in floorboards if they wish. It is none of the federal government’s matter and they should leave it alone. Millionaires and billionaires are not evil and their money is not up for grabs – regardless of what Obama thinks from his socialist perch.

These millionaires and billionaires make jobs, and plenty of them. They create wealth from the opportunities they present to others for doing business. Wealth is not stagnant and idol – it moves and spreads if left alone by government and its cancerous grip. Obama’s jobs bill is a tax bill and nothing more. It is an effort to remove the genesis of all economic growth: wealth, from the hands that can best employ it – private investors and entrepreneurs. It is an effort to pull power from the people who wish to ‘help’ others, and bring it back to Washington where it will be spent on some wasted, and likely unconstitutional effort at social change.

I thought we were done with tax and spend politics? I thought we had learned our lessons about demonizing successful people? I thought we were a capitalist society? I thought wealthy people were individuals we should look up to and admire for their determination, hard work and charitable efforts – like Sam Walton.